Crown's Victoria taps a gusher

Mexico's oldest brew sharpens importer's edge in Hispanic beer market

Lines snaked out the door of Moreno's Liquors in Little Village last June, as the growing crowd waited for a chance to buy Victoria beer.

Moreno's, which serves the highest concentration of young Latinos in the city, was among the few locations that Crown Imports LLC picked for the U.S. debut of Victoria, Mexico's oldest and best-selling brand behind Corona Extra.

Even at $30 per case, customers snapped up a semi-trailer-load over four days, recalls owner Mike Moreno, 57. “I have never ever seen that happen with any product at all, and I've been here 33 years,” he says.

Called the gem in Crown's portfolio, the beer whose name translates to “victory” was as much a triumph for the Chicago-based importer as it was for native Mexicans in Chicago who yearn for a taste of home. Victoria's launch gave Crown a much-needed boost amid a two-year sales slide in its flagship Corona brand, which drives 70% to 80% of the company's sales volume.

Victoria also bolsters Crown's position as the leading U.S. importer of Mexican beers, a powerful edge as the sweet spot of the American beer market takes on a distinctly Hispanic flavor. Hispanics represent a growing slice of the country's twentysomethings, the prime demographic for beer-drinking.

“Latinos represent 24% of 21- to 25-year-olds. . . .That soars to 31% in five years,” MillerCoors LLC CEO Leo Kiely told the Executives' Club of Chicago in a speech Dec. 1. “They'll drive two-thirds of the industry's growth over the next decade.”

Appealing to a growing Hispanic constituency is critical in an industry where overall sales are shrinking. Beer sales fell 2% nationwide in 2009 and are on track for a 1.5% to 2% decline this year, according to beer industry newsletter Beer Marketer's Insights in Suffern, N.Y.

Modelo Especial is the second-largest brand in the portfolio and just surpassed 30 million cases annually, making it bigger than Samuel Adams.

CORONA CLONES

Crown will need every weapon it can muster as larger rivals muscle in. Chicago-based MillerCoors and Anheuser-Busch InBev introduced Corona clones in recent years with Miller Chill and Bud Light Lime, respectively, giving Corona its first real competition after more than a decade of soaring sales. In April, Amsterdam-based Heineken N.V. bought Femsa Cerveza, Mexico's second-largest brewer, which produces Dos Equis, Sol and Tecate.

“Everybody understands that they've got to have a play,” Crown President Bill Hackett says.

While he admits Corona's recent slide made for “a challenging couple of years,” Mr. Hackett notes, “This year Corona is running 6.5 points better. We've dramatically improved the trend while also generating mid- to high-teen growth in Modelo Especial and across the rest of the portfolio.”

Crown stepped up marketing this year with the new “Find Your Beach” ad campaign for Corona and new promotional efforts in bars. It also worked harder to persuade bars to put Modelo on tap and introduced Victoria in bars outside Hispanic communities.

Since launching Victoria in Chicago, Crown has brought the brand to Texas and Colorado.

When Crown launched in Chicago, it selected a group of general-market bars and restaurants, including Mercadito Chicago.

“Everybody was here,” says Felipe Ospino, general manager of the River North restaurant, where beer accounts for 11% of sales. A highlight of the launch evening was replacing the tap selection.

“We took off the one from Dos Equis and put on the one from Victoria, and we sat down in the lounge and drank a lot of tequila and Victoria.”